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ADM Reports Second Quarter Earnings

Adjusted EPS up 39% over prior-year quarter

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Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended June 30, 2017.

“We continued to deliver on our strategic plan and capitalize on improving conditions in some markets to achieve strong 39 percent year-over-year earnings growth,” said ADM Chairman and CEO Juan Luciano.

“Our actions in the first half of the year reflect ADM’s continuous efforts to create shareholder value. We are diversifying our capabilities and geographic reach through acquisitions and organic expansions. We are aggressively managing costs and capital, and taking additional portfolio actions; and we are ahead of pace to meet our 2017 target of $225 million in run-rate savings.

“With these collective actions, we expect to deliver solid year-over-year earnings growth and returns in 2017, and we are poised to be an even stronger company in 2018.”

Second Quarter 2017 Highlights

2017 2016
(Amounts in millions except per share data)
Earnings per share (as reported) $ 0.48 $ 0.48
Adjusted earnings per share 1 $ 0.57 $ 0.41
Segment operating profit $ 642 $ 680
Adjusted segment operating profit 1 $ 658 $ 573
Agricultural Services 109 57
Corn Processing 224 163
Oilseeds Processing 206 235
WFSI 92 94
Other 27 24
  • EPS as reported of $0.48 includes a $0.04 per share charge related to asset impairments, restructuring and settlement activities; a $0.04 per share net loss on the sale of assets and businesses; and a $0.01 per share LIFO charge. Adjusted EPS, which excludes these items, was $0.571.
  • Trailing four-quarter-average adjusted ROIC was 6.8 percent1, 80 basis points above annual WACC of 6.0 percent.
  • During the first half of 2017, the company returned $875 million to shareholders through dividends and share repurchases.
1 Non-GAAP financial measures; see pages 4, 9 and 10 for explanations and reconciliations, including after-tax amounts.

Results of Operations

Ag Services delivered its fourth consecutive quarter of year-over-year increases in operating profits.

In Merchandising and Handling, North America Grain results increased significantly over the prior year with strong carries in wheat, corn and soybeans. Global Trade generated solid results and was up over the year-ago quarter, benefiting from improved margins, favorable timing effects and actions to improve performance.

Transportation decreased from the prior-year period, primarily due to river conditions and lower freight rates.

Milling and Other delivered solid results on steady margins and favorable merchandising.

Corn Processing results were up from the year-ago quarter. Higher volumes and improved margins in North America Sweeteners and Starches contributed to another strong performance. Bioproducts results increased over a weak prior year, with an improvement in ethanol margins.

Oilseeds Processing benefited from the diversity of its feedstocks, products and geographies; however, overall results were down compared to the second quarter of 2016. Weak margins in both global soybean crush and South American origination impacted Crushing and Origination results. Softseeds earnings were higher as a result of leveraging the business’s global flex capacity to capitalize on margin opportunities.

Refining, Packaging, Biodiesel and Other had solid results in all regions, with South America refined and packaged oils and the global peanut business contributing to strong performance in the quarter. North America Biodiesel results also improved over the prior-year quarter, which was impacted by unfavorable timing effects.

Asia experienced another good quarter, growing significantly over the prior-year period due both to ADM’s increased ownership stake in, and strong results from, Wilmar.

WFSI was in line with the prior-year quarter. WILD Flavors delivered double-digit operating profit growth with strong sales globally. Specialty Ingredients was down for the quarter.

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 $642 million for the quarter includes charges of $26 million related to asset impairment, restructuring and settlement activities, and a net pretax gain on the sale of assets and businesses of $8 million. Prior-year segment operating profit included asset impairment and restructuring charges of $10 million and a net pretax gain on the sale of assets and businesses of $118 million.

In Corporate results, Minority Interest and Other charges increased from the prior year primarily due to updated portfolio investment valuations in CIP, and Unallocated Costs were up due to continued investments in ADM’s business transformation program and related IT costs, and in research and development.

The 28 percent effective tax rate reflects an approximately 1 percent decrease due primarily to changes in the forecast geographic mix of earnings and the effect of changes in discrete items year over year, partially offset by the expiration of U.S. tax credits including the biodiesel tax credit.

Conference Call Information

ADM will host a webcast on August 1, 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.

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