Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended March 31, 2017.
“Our year-over-year results improved as a company and in all four of our business segments during the first quarter, and we continue to be on course for a stronger 2017,” said ADM Chairman and CEO Juan Luciano. “Ag Services was up for the quarter, with higher results in U.S. grain and transportation operations. The Corn business delivered a good quarter, with improved performances across their portfolio. Oilseeds earnings were up, including solid results in global softseeds and from our equity investment in Wilmar. WFSI results were higher, led by WILD Flavors.
“We are continuing to execute the long-term strategic plan that we launched in 2012, and we are seeing the results. We have strengthened our core, improving our cost positions and implementing measures to improve results where necessary. Our operational excellence initiatives have delivered significant savings and efficiencies. And we continue to grow strategically by expanding into new geographies and increasing our capabilities in food, beverage and feed. Those actions contributed to the improved results we saw in the first quarter despite muted margin environments in some businesses. The continued momentum in the execution of our plan gives us confidence that we will deliver sustainable value creation.”
First Quarter 2017 Highlights
2016 As Reported Adj Adjusted1 As Reported Adj Adjusted1
Earnings per share $ 0.59 $ 0.01 $ 0.60 $ 0.39 $ 0.03 $ 0.42
Segment Operating Profit1
Agricultural Services $ 81 $ 7 $ 88 $ 75 $ 1 $ 76 Corn Processing 177 (6) 171 131 (2) 129 Oilseeds Processing 313 1 314 260 1 261 WFSI 75— 75 70— 70 Other 30— 30 37— 37
Total $676$ 2 $678 $573$ — $573
1 Non-GAAP financial measures; see pages 4 and 9 for explanations and reconciliations, including after-tax amounts.
First Quarter 2017 Highlights (continued)
- EPS as reported of $0.59 includes a $0.01 per share charge related to asset impairments and restructuring; a $0.01 per share LIFO gain; and certain discrete tax items of $0.01 per share. Adjusted EPS, which excludes these items, was $0.601.
- Trailing four-quarter-average adjusted ROIC was 6.4 percent1, 40 basis points above annual WACC of 6.0 percent.
- The effective tax rate was 26 percent for the quarter compared to 25 percent in the year-ago quarter.
- During the first quarter of 2017, the company returned $431 million to shareholders through dividends and share repurchases.
Results of Operations
Ag Services delivered improved results over the year-ago quarter. In Merchandising and Handling, North America grain showed better results, with improving grain carries and good execution volumes amid strong global demand for U.S. commodities. International merchandising was down from the year-ago quarter due to lack of merchandising opportunities and some unfavorable mark-to-market effects.
Transportation had a significantly improved quarter, led by our North America barge and stevedoring operations, which capitalized on high volumes versus the prior-year quarter.
Milling and Other had a solid quarter, but with lower volumes and margins.
Corn Processing results were significantly better than the year-ago quarter. Sweeteners and starches delivered a strong performance on improved domestic demand and higher volumes and margins from the European business. Bioproducts was up over the previous year, with very strong exports and improved margins driving solid results in ethanol. Animal nutrition was up, with improved margins in lysine offset partially by overall lower sales volumes caused by a mild winter.
Oilseeds Processing results were up over the first quarter of 2016. Crushing and origination was comparable to the year-ago period: Softseeds results were significantly higher than the previous year, as we took advantage of our softseed processing footprint and flex capacity to capitalize on margin opportunities both in North America and Europe. A competitive global protein meal market continued to pressure soybean crush margins. South America crush and origination was down, as the pace of farmer selling has not kept pace with export demand.
Refining, packaging, biodiesel and other results declined. Solid EU food oils results were offset by timing effects; North American biodiesel volumes and margins were down, while South American packaged oils and biodiesel improved.
Results in Asia improved significantly over the prior-year quarter, due to both ADM’s increased ownership stake in, and strong results from, Wilmar.
WFSI was up over the prior-year quarter. WILD Flavors improved on its solid first quarter in 2016: The EMEAI WILD Flavors business had a very strong March, led by good sales volumes in Africa and the Middle East. The WILD Flavors business in Asia also had a good quarter, thanks to strong sales in China. Specialty ingredients was slightly down for the quarter, as solid protein results in North America were offset by weaker results in some specialty ingredients, including fibers.
1 Non-GAAP financial measures; see pages 9 and 10 for explanations and reconciliations, including after-tax amounts.
Other Items of Note
As additional information to help clarify underlying business performance, the tables on page 9 include both reported EPS as well as adjusted EPS excluding significant timing effects.
Segment operating profit of $676 million as reported for the quarter includes charges of $9 million related to asset impairment and restructuring activities. Prior-year segment operating profit included restructuring charges of $2 million.
Minority interest and other corporate results improved from the prior year primarily due to improved results from our equity investment in CIP. Corporate unallocated costs were up due to ADM’s business transformation program and related IT costs, and higher people costs including benefit accruals.
The effective tax rate increased approximately 1 percent due primarily to the expiration of U.S. tax credits including the biodiesel tax credit, partially offset by changes in the forecast geographic mix of earnings.
Conference Call Information
ADM will host a webcast on May 2, 2017, at 8 a.m. Central Time to discuss financial results and provide a company update. A financial summary slide presentation will be available to download approximately 60 minutes prior to the call. To listen to the webcast or to download the slide presentation, go to www.adm.com/webcast. A replay of the webcast will also be available for an extended period of time at www.adm.com/webcast.
Forward-Looking Statements
Some of the above statements constitute forward-looking statements. These statements are based on many assumptions and factors that are subject to risk and uncertainties. ADM has provided additional information in its reports on file with the SEC concerning assumptions and factors that could cause actual results to differ materially from those in this presentation, and you should carefully review the assumptions and factors in our SEC reports. To the extent permitted under applicable law, ADM assumes no obligation to update any forward-looking statements.
About ADM
For more than a century, the people of Archer Daniels Midland Company (NYSE: ADM) have transformed crops into products that serve the vital needs of a growing world. Today, we’re one of the world’s largest agricultural processors and food ingredient providers, with approximately 32,000 employees serving customers in more than 160 countries. With a global value chain that includes approximately 500 crop procurement locations, 250 ingredient manufacturing facilities, 38 innovation centers and the world’s premier crop transportation network, we connect the harvest to the home, making products for food, animal feed, industrial and energy uses. Learn more at www.adm.com.
