Welcome to SJGLE.com! |Register for free|log in
Welcome to SJGLE.com! |Register for free|log in
Related Searches: Tea Vitamin Nutrients Ingredients paper cup packing
Net earnings of $233 million Extreme weather conditions negatively impact segment OP by approximately $60 million Expectation for stronger second half, driven by improved business environment and contributions from accelerating business initiatives
CHICAGO--(BUSINESS WIRE)-- Archer Daniels Midland Company (NYSE: ADM) today reported financial results for the quarter ended March 31, 2019.
“The first quarter proved more challenging than initially expected,” said Chairman and CEO Juan Luciano. “Impacts from severe weather in North America were on the high side of our initial estimates, and the ethanol industry environment limited margins and opportunities.
“Despite a challenging start to the year, we continue to make excellent progress on our key imperatives for 2019: improving performance in certain businesses, accelerating our Readiness efforts, and delivering results from our growth investments,” Luciano continued. “We are very encouraged with our new Neovia business and the creation of a global Animal Nutrition platform. Readiness continues to expand our efforts to enhance our competitiveness. And additional actions we are announcing today will help us advance our goals to deliver best-in-class customer service along with long-term growth and shareholder value.
“With three quarters of the year still ahead of us, the continued advancement of our strategy, combined with an anticipated resolution of the U.S.-China trade situation and an expected acceleration of soybean meal demand driven by African Swine Fever, make us optimistic for the second half. Taking all of these factors into account, we remain committed to continuing to pull the levers under our control to deliver our objective of full-year earnings comparable to or higher than 2018.”
As part of that commitment, the company is announcing a series of measures to continue to underpin long-term-value creation:
First Quarter 2019 Highlights
2019 | 2018 | ||||||
(Amounts in millions except per share data) | |||||||
Earnings per share (as reported) | $ | 0.41 | $ | 0.70 | |||
Adjusted earnings per share 1 | $ | 0.46 | $ | 0.68 | |||
Segment operating profit | $ | 611 | $ | 704 | |||
Adjusted segment operating profit 1 | $ | 608 | $ | 717 | |||
Origination | 76 | 46 | |||||
Oilseeds | 341 | 349 | |||||
Carbohydrate Solutions | 96 | 213 | |||||
Nutrition | 81 | 96 | |||||
Other | 14 | 13 | |||||
1 Non-GAAP financial measures; see pages 5, 10 and 11 for explanations and reconciliations, including after-tax amounts.
Results of Operations
Origination results were higher than the prior-year period.
Oilseeds results were comparable to the year-ago period, which benefited significantly from the Biodiesel Tax Credit.
Carbohydrate Solutions results were significantly lower than the year-ago quarter.
Nutrition results overall were down year-over-year, with WFSI results higher and Animal Nutrition results lower.
Other results were in line with the year-ago period. Captive insurance was lower on unfavorable underwriting results, and ADM Investor Services results improved year-over-year.
Other Items of Note
As additional information to help clarify underlying business performance, the table on page 10 includes reported earnings and EPS as well as adjusted earnings and EPS.
Segment operating profit of $611 million for the quarter includes gains of $12 million ($0.02 per share) related to the sale of certain assets and a step-up gain on an equity investment, as well as a $9 million charge ($0.02 per share) related to asset impairment.
In Corporate results, unallocated corporate costs for the quarter increased principally due to centralization of certain activities from the business units, resulting in a transfer-in of costs; investments in IT, R&D and innovation; and Readiness-related project costs. Other charges for the quarter in Corporate improved due to better results from the companys investment in Compagnie Industrielle et Financiere des produits Amylaces SA (CIP).
Corporate results also include restructuring charges of $2 million and acquisition-related expenses of $14 million ($0.02 per share).
The effective tax rate for the quarter was approximately 26 percent, including transition tax expense from U.S. tax reform and other discrete items. The adjusted effective tax rate, excluding these items, was about 19.3 percent.
Conference Call Information
ADM will host a webcast on April 26, 2019, 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 updat 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 40,000 employees serving customers in nearly 200 countries. With a global value chain that includes approximately 450 crop procurement locations, more than 330 food and feed ingredient manufacturing facilities, 62 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.
Financial Tables Follow
Segment Operating Profit, Adjusted Segment Operating Profit (a non-GAAP measure) and Corporate Results | ||||||||||||
(unaudited) |
||||||||||||
Quarter ended |
||||||||||||
(In millions) | 2019 | 2018 | Change | |||||||||
Segment Operating Profit | $ | 611 | $ | 704 | $ | (93 | ) | |||||
Specified items: | ||||||||||||
(Gains) losses on sales of assets and businesses | (12 | ) | — | (12 | ) | |||||||
Impairment, restructuring, and settlement charges | 9 | 13 | (4 | ) | ||||||||
Adjusted Segment Operating Profit | $ | 608 | $ | 717 | $ | (109 | ) | |||||
Origination | $ | 76 | $ | 46 | $ | 30 | ||||||
Merchandising and handling | 61 | 43 | 18 | |||||||||
Transportation | 15 | 3 | 12 | |||||||||
Oilseeds | $ | 341 | $ | 349 | $ | 8 | ||||||
Crushing and origination | 211 | 60 | 151 | |||||||||
Refining, packaging, biodiesel, and other | 76 | 180 | 104 | |||||||||
Asia | 54 | 109 | 55 | |||||||||
Carbohydrate Solutions | $ | 96 | $ | 213 | $ | 117 | ||||||
Starches and sweeteners | 170 | 216 | 46 | |||||||||
Bioproducts | 74 | 3 | 71 | |||||||||
Nutrition | $ | 81 | $ | 96 | $ | 15 | ||||||
WFSI | 88 | 73 | 15 | |||||||||
Animal Nutrition | 7 | 23 | 30 | |||||||||
Other | $ | 14 | $ | 13 | $ | 1 | ||||||
Segment Operating Profit | $ | 611 | $ | 704 | $ | 93 | ||||||
Corporate Results | $ | 296 | $ | 240 | $ | 56 | ||||||
Interest expense - net | (90 | ) | (83 | ) | (7 | ) | ||||||
Unallocated corporate costs | (183 | ) | (146 | ) | (37 | ) | ||||||
Other charges | (6 | ) | (16 | ) | 10 | |||||||
Specified items: | ||||||||||||
LIFO credit (charge) | (1 | ) | 8 | (9 | ) | |||||||
Expenses related to acquisitions | (14 | ) | — | (14 | ) | |||||||
Impairment, restructuring and settlement charges | (2 | ) | (3 | ) | 1 | |||||||
Earnings Before Income Taxes | $ | 315 | $ | 464 | $ | (149 | ) |
Segment operating profit is ADM’s consolidated income from operations before income tax excluding corporate items. Adjusted segment operating profit, a non-GAAP measure, is segment operating profit excluding specified items. Management believes that segment operating profit and adjusted segment operating profit are useful measures of ADM’s performance because they provide investors information about ADM’s business unit performance excluding corporate overhead costs as well as specified items. Segment operating profit and adjusted segment operating profit are not measures of consolidated operating results under U.S. GAAP and should not be considered alternatives to income before income taxes, the most directly comparable GAAP financial measure, or any other measure of consolidated operating results under U.S. GAAP.
Consolidated Statements of Earnings | ||||||||
(unaudited) |
||||||||
Quarter ended |
||||||||
2019 | 2018 | |||||||
(in millions, except per share amounts) | ||||||||
Revenues | $ | 15,304 | $ | 15,526 | ||||
Cost of products sold (1) | 14,376 | 14,637 | ||||||
Gross profit | 928 | 889 | ||||||
Selling, general, and administrative expenses (2) | 659 | 513 | ||||||
Asset impairment, exit, and restructuring costs (3) | 11 | 16 | ||||||
Equity in (earnings) losses of unconsolidated affiliates | (101 | ) | (147 | ) | ||||
Interest income | (49 | ) | (33 | ) | ||||
Interest expense | 101 | 91 | ||||||
Other (income) expense - net (4) | (8 | ) | (15 | ) | ||||
Earnings before income taxes | 315 | 464 | ||||||
Income tax expense (5) | 81 | 68 | ||||||
Net earnings including noncontrolling interests | 234 | 396 | ||||||
Less: Net earnings (losses) attributable to noncontrolling interests | 1 | 3 | ||||||
Net earnings attributable to ADM | $ | 233 | $ | 393 | ||||
Diluted earnings per common share | $ | 0.41 | $ | 0.70 | ||||
Average diluted shares outstanding | 566 | 565 |
(1) Includes a charge (credit) related to changes in the Company’s LIFO reserves of $1 million in the current quarter and ($8 million) in the prior quarter.
(2) Includes acquisition-related expenses of $14 million in the current quarter.
(3) Includes charges related to impairment of certain assets and restructuring charges of $11 million in the current quarter and $16 million in the prior quarter.
(4) Includes current quarter gains of $12 million related to the sale of certain assets and a step-up gain on an equity investment.
(5) Includes the tax expense (benefit) impact of the above specified items, tax discrete items, and true-up adjustments totaling $14 million in the current quarter and ($16 million) in the prior quarter.
Summary of Financial Condition | |||||||
(unaudited) |
|||||||
March 31, |
March 31, 2018 |
||||||
(in millions) | |||||||
Net Investment In | |||||||
Cash and cash equivalents (a) | $ | 926 | $ | 797 | |||
Short-term marketable securities (a) | 9 | — | |||||
Operating working capital (b) | 8,175 | 9,167 | |||||
Property, plant, and equipment | 10,299 | 10,123 | |||||
Investments in and advances to affiliates | 5,332 | 5,151 | |||||
Long-term marketable securities | 22 | 91 | |||||
Goodwill and other intangibles | 5,459 | 3,970 | |||||
Other non-current assets | 1,777 | 859 | |||||
$ | 31,999 | $ | 30,158 | ||||
Financed By | |||||||
Short-term debt (a) | $ | 1,595 | $ | 2,330 | |||
Long-term debt, including current maturities (a) | 8,289 | 6,670 | |||||
Deferred liabilities | 3,156 | 2,362 | |||||
Temporary equity | 49 | 59 | |||||
Shareholders’ equity | 18,910 | 18,737 | |||||
$ | 31,999 | $ | 30,158 |
Summary of Cash Flows | ||||||||
(unaudited) |
||||||||
Three months ended |
||||||||
2019 | 2018 | |||||||
(in millions) | ||||||||
Operating Activities | ||||||||
Net earnings | $ | 234 | $ | 396 | ||||
Depreciation and amortization | 245 | 235 | ||||||
Asset impairment charges | 9 | 12 | ||||||
Gains on sales of assets | (15 | ) | (6 | ) | ||||
Other - net | (7 | ) | (84 | ) | ||||
Change in deferred consideration in securitized receivables(a) | (1,778 | ) | (2,450 | ) | ||||
Other changes in operating assets and liabilities | (723 | ) | (1,677 | ) | ||||
Total Operating Activities | (2,035 | ) | (3,574 | ) | ||||
Investing Activities | ||||||||
Purchases of property, plant and equipment | (198 | ) | (196 | ) | ||||
Net assets of businesses acquired | (1,876 | ) | — | |||||
Proceeds from sale of business/assets | 18 | 14 | ||||||
Investments in retained interest in securitized receivables(a) | (1,313 | ) | (1,298 | ) | ||||
Proceeds from retained interest in securitized receivables(a) | 3,091 | 3,656 | ||||||
Marketable securities - net | 50 | — | ||||||
Investments in and advances to affiliates | (9 | ) | — | |||||
Other investing activities | (34 | ) | 4 | |||||
Total Investing Activities | (271 | ) | 2,180 | |||||
Financing Activities | ||||||||
Long-term debt payments | (4 | ) | (1 | ) | ||||
Net borrowings (payments) under lines of credit | 1,309 | 1,474 | ||||||
Cash dividends | (198 | ) | (190 | ) | ||||
Other | (42 | ) | (6 | ) | ||||
Total Financing Activities | 1,065 | 1,277 | ||||||
Increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | (1,241 | ) | (117 | ) | ||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents - beginning of period | 3,843 | 1,858 | ||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents - end of period | $ | 2,602 | $ | 1,741 |
(a) Cash flows related to the Company’s retained interest in securitized receivables as required by ASU 2016-15 which took effect January 1, 2018.
Segment Operating Analysis | |||||||
(unaudited) |
|||||||
Quarter ended |
|||||||
2019 | 2018 | ||||||
(in ‘000s metric tons) | |||||||
Processed volumes (by commodity) | |||||||
Oilseeds | 9,167 | 9,047 | |||||
Corn | 5,132 | 5,591 | |||||
Total processed volumes | 14,299 | 14,638 | |||||
Quarter ended |
|||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Revenues | |||||||
Origination | $ | 6,124 | $ | 6,267 | |||
Oilseeds | 5,414 | 5,602 | |||||
Carbohydrate Solutions | 2,403 | 2,601 | |||||
Nutrition | 1,282 | 950 | |||||
Other | 81 | 106 | |||||
Total revenues | $ | 15,304 | $ | 15,526 |
Adjusted Earnings Per Share | ||||||||||||||||
A non-GAAP financial measure | ||||||||||||||||
(unaudited) |
||||||||||||||||
Quarter ended |
||||||||||||||||
2019 | 2018 | |||||||||||||||
In millions | Per share | In millions | Per share | |||||||||||||
Net earnings and fully diluted EPS | $ | 233 | $ | 0.41 | $ | 393 | $ | 0.70 | ||||||||
Adjustments: | ||||||||||||||||
LIFO charge (credit) (a) | 1 | — | (6 | ) | (0.01 | ) | ||||||||||
Losses (gains) on sales of assets and businesses (b) | (9 | ) | (0.02 | ) | — | — | ||||||||||
Asset impairment, restructuring, and settlement charges (c) | 10 | 0.02 | 12 | 0.02 | ||||||||||||
Expenses related to acquisitions (d) | 9 | 0.02 | — | — | ||||||||||||
Tax adjustment (e) | 17 | 0.03 | (14 | ) | (0.03 | ) | ||||||||||
Sub-total adjustments | 28 | 0.05 | (8 | ) | (0.02 | ) | ||||||||||
Adjusted net earnings and adjusted EPS | $ | 261 | $ | 0.46 | $ | 385 | $ | 0.68 |
Adjusted net earnings reflects ADM’s reported net earnings after removal of the effect on net earnings of specified items as more fully described above. Adjusted EPS reflects ADM’s fully diluted EPS after removal of the effect on EPS as reported of specified items as more fully described above. Management believes that Adjusted net earnings and Adjusted EPS are useful measures of ADM’s performance because they provide investors additional information about ADM’s operations allowing better evaluation of underlying business performance and better period-to-period comparability. These non-GAAP financial measures are not intended to replac or be alternatives to net earnings and EPS as reported, the most directly comparable GAAP financial measures, or any other measures of operating results under GAAP. Earnings amounts described above have been divided by the company’s diluted shares outstanding for each respective period in order to arrive at an adjusted EPS amount for each specified item.
Adjusted Return on Invested Capital | ||||||||||||||||||||
A non-GAAP financial measure | ||||||||||||||||||||
(unaudited) |
||||||||||||||||||||
Adjusted ROIC Earnings (in millions) | ||||||||||||||||||||
Four Quarters | ||||||||||||||||||||
Quarter Ended | Ended | |||||||||||||||||||
June 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2019 | ||||||||||||||||
Net earnings attributable to ADM | $ | 566 | $ | 536 | $ | 315 | $ | 233 | $ | 1,650 | ||||||||||
Adjustments: | ||||||||||||||||||||
Interest expense | 89 | 87 | 97 | 101 | 374 | |||||||||||||||
LIFO | (13 | ) | 7 | (4 | ) | 1 | (9 | ) | ||||||||||||
Other adjustments (3) | 31 | (20 | ) | 241 | 30 | 282 | ||||||||||||||
Total adjustments | 107 | 74 | 334 | 132 | 647 | |||||||||||||||
Tax on adjustments | (26 | ) | (21 | ) | (80 | ) | (28 | ) | (155 | ) | ||||||||||
Net adjustments | 81 | 53 | 254 | 104 | 492 | |||||||||||||||
Total Adjusted ROIC Earnings | $ | 647 | $ | 589 | $ | 569 | $ | 337 | $ | 2,142 |
Adjusted Invested Capital (in millions) | ||||||||||||||||||||
Quarter Ended | Trailing Four | |||||||||||||||||||
June 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2019 | Quarter Average | ||||||||||||||||
Equity (1) | $ | 18,710 | $ | 18,987 | $ | 18,981 | $ | 18,895 | $ | 18,893 | ||||||||||
+ Interest-bearing liabilities (2) | 7,630 | 7,857 | 8,392 | 9,887 | 8,442 | |||||||||||||||
+ LIFO adjustment (net of tax) | 39 | 44 | 41 | 42 | 42 | |||||||||||||||
Other adjustments (3) | 23 | (18 | ) | 183 | 27 | 54 | ||||||||||||||
Total Adjusted Invested Capital | $ | 26,402 | $ | 26,870 | $ | 27,597 | $ | 28,851 | $ | 27,431 | ||||||||||
Adjusted Return on Invested Capital | 7.8 | % |
(1) |
Excludes noncontrolling interests |
|
(2) |
Includes short-term debt, current maturities of long-term debt, finance lease obligations, and long-term debt |
|
(3) |
Includes the impact of U.S. tax reform |
|
Adjusted ROIC is Adjusted ROIC earnings divided by adjusted invested capital. Adjusted ROIC earnings is ADM’s net earnings adjusted for the after tax effects of interest expense, changes in the LIFO reserve and other specified items. Adjusted invested capital is the sum of ADM’s equity (excluding noncontrolling interests) and interest-bearing liabilities adjusted for the after tax effect of the LIFO reserve, and other specified items. Management believes Adjusted ROIC is a useful financial measure because it provides investors information about ADM’s returns excluding the impacts of LIFO inventory reserves and other specified items and increases period-to-period comparability of underlying business performance. Management uses Adjusted ROIC to measure ADM’s performance by comparing Adjusted ROIC to its weighted average cost of capital (WACC). Adjusted ROIC, Adjusted ROIC earnings and Adjusted invested capital are non-GAAP financial measures and are not intended to replac or be alternatives to GAAP financial measures.
E-newsletter
Tags