Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q2 2018 Earnings Presentation
22 slides from Archer-daniels-midland's earnings presentation, Jul 31, 2018
Slide 1: Second Quarter 2018 Earnings Conference Call
Second Quarter 2018 Earnings Conference Call July 31, 2018
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement Some of our comments constitute forward-looking statements that reflect management’s current views and estimates of future economic circumstances, industry conditions, Company performance and financial results. These statements are based on many assumptions and factors that a
Slide 3: Second Quarter Accomplishments
3 Second Quarter Accomplishments • Realized $150M YOY • Operational excellence cost • Driving growth in key profitability increase in savings of more than platforms: businesses targeted for $150M YTD ◦ Animal Nutrition: Neovia; improvement new U.S. facilities ◦ On track to exceed ◦ Health & Wellness
Slide 4: Q2 2018 Financial Highlights
4 Q2 2018 Financial Highlights Quarter Ended June 30 (Amounts in millions except per share data and percentages) 2018 2017 Change Adjusted earnings per share (1) (2) $1.02 $0.57 $0.45 Adjusted segment operating profit (1) (3) $924 $658 $266 Effective tax rate 13% 28% Trailing 4Q average adjusted ROI
Slide 5: Segment Operating Profit and Corporate Results
5 Segment Operating Profit and Corporate Results Quarter Ended June 30 (Amounts in millions) 2018 2017 Change Total Segment Operating Profit(1) $ 902 $ 642 $ 260 Specified items: (Gains) loss on sales of assets and businesses — (8) 8 Impairment and restructuring charges 22 26 (4) Hedge timing effect
Slide 6: Balanced Use of Cash Between Investments and Return of Capital to Shareholders
6 Balanced Use of Cash Between Investments and Return of Capital to Shareholders Six Months Ended June 30 (Amounts in millions) 2018 2017 Cash from operations before working capital changes $1,138 $1,000 Change in retained interest in securitized receivables(1) (79) (179) Other changes in working ca
Slide 7: Maintained Solid Balance Sheet
7 Maintained Solid Balance Sheet (Amounts in millions) June 30, 2018 June 30, 2017 Cash⁽¹⁾ $853 $670 Net property, plant, and equipment 9,948 9,945 Operating working capital⁽²⁾ 7,718 7,034 - Total inventories 7,953 7,846 Total debt 7,623 6,980 - CP outstanding 692 220 Shareholders’ Equity 18,712 17,
Slide 8: Adjusted Segment Operating Profit of $924 million
8 Adjusted Segment Operating Profit of $924 million Adjusted segment operating profit (in millions) Excludes specified items and timing effects Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • Q2 adjusted segment OP up 40% $658 $541 $793 $717 $924* year-over-year • H1 adjusted segment OP of $1.6 billion, u
Slide 9: Origination: Outstanding Quarter, Up Significantly
9 Origination: Outstanding Quarter, Up Significantly Segment operating profit (in millions) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • NA Grain major driver; higher $57 $39 $261 $45 $189 export volumes and margins, good execution on risk management • Global Trade incl. destination marketing, as well
Slide 10: Oilseeds: Significantly Higher Results
10 Oilseeds: Significantly Higher Results Segment operating profit (in millions) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • Record crush volumes for a $201 $117 $201 $350 $341 second quarter, capitalizing on strong meal demand and favorable crush margins • High demand and improved margins in South Am
Slide 11: Carbohydrate Solutions: Down Modestly
11 Carbohydrate Solutions: Down Modestly Segment operating profit (in millions) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • North American S&S business $279 $296 $285 $213 $249 solid • Weaker ethanol execution margins • Making important long-term upgrades to Decatur corn complex Starches & Sweeteners
Slide 12: Nutrition: Adjusted OP Up More Than 20 Percent
12 Nutrition: Adjusted OP Up More Than 20 Percent Segment operating profit (in millions) Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • Revenue growth of 7 percent $94 $68 $73 $96 $114 • WFSI up substantially, with improved sales and results in Specialty Ingredients, WILD Flavors and Health & Wellness •
Slide 13: Looking Ahead and Upcoming Investor Events
13 Looking Ahead and Upcoming Investor Events JP Morgan 9th Annual US All Stars Conference London, UK September 17-18 Credit Suisse Consumer IR Day New York, NY September 20
Slide 14: Appendix
Appendix
Slide 15: GAAP Statement of Earnings Summary
15 GAAP Statement of Earnings Summary Quarter Ended June 30 (Amounts in millions except per share data) 2018 2017 Change Revenues $17,068 $14,943 $2,125 Gross profit 1,181 892 289 Selling, general and administrative expenses 560 525 35 Asset impairment, exit, and restructuring charges 24 23 1 Equity
Slide 16: Adjusted Earnings Per Share (EPS)
16 Adjusted Earnings Per Share (EPS) (Amounts in millions except per share data) Quarter Ended June 30 2018 2017 Pre-tax After-tax Per share Pre-tax After-tax Per share Earnings and EPS (fully diluted) as reported $ 652 $ 566 $ 1.00 $ 383 $ 276 $ 0.48 Adjustments LIFO (credit)/charge (13) (10) (0.02
Slide 17: ROIC versus WACC
17 ROIC versus WACC Q2 CY18 (1)(2) LT ROIC Objective: 10% Trailing 4Q Average Adjusted ROIC Annual WACC 7.3% 6.25% Trailing 4Q Average Adjusted EVA $275M 11% Long-Term WACC 7.0% Trailing 4Q Average ROIC (1)(3) 8.2% 10% 9% 8% 7% 6% 5% 4% Q2 Q2 Q2 Q2 Q2 CY14 CY15 CY16 CY17 CY18 Trailing 4Q Average ROI
Slide 18: Return on Invested Capital
18 Return on Invested Capital Adjusted ROIC Earnings(1) (Amounts in millions) Four Quarters Quarter Ended Ended Sep. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 June 30, 2018 June 30, 2018 Net earnings attributable to ADM $ 192 $ 788 $ 393 $ 566 $ 1,939 Adjustments Interest expense 79 84 91 89 343 LIFO cha
Slide 19: Segment OP and Adjusted OP Comparatives Introducing New Segments
19 Segment OP and Adjusted OP (a non-GAAP measure) Comparatives Introducing New Segments Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended Year Ended Mar. 31, 2017 Jun. 30, 2017 Sep. 30, 2017 Dec. 31, 2017 Dec. 31, 2017 As Pro As Pro As Pro As Pro As Pro As Pro Reported Forma Reported Forma Reported Forma
Slide 20: Segment OP and Adjusted OP as Currently Reported vs Previous Segments
20 Segment OP and Adjusted OP (a non-GAAP measure) as Currently Reported vs Previous Segments Quarter Ended June 30, 2018 As Currently Pro As Currently Reported Pro Forma Reported Forma (In millions) Segment Operating Profit(1) Segment Operating Profit(1) $ 902 $ 902 Specified items: Specified items
Slide 21: Processed Volumes (by commodity)
21 Processed Volumes (by commodity) Metric Tons Processed (000s) Calendar Year 2013 2014 2015 2016 2017 Oilseeds 31,768 32,208 33,817 33,788 34,733 Corn 23,688 23,668 23,126 22,273 22,700 55,456 55,876 56,943 56,061 57,433 CY16 CY17 CY18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Oilseeds 8,281 8,468 8,388 8,651
Slide 22: Notes: Non-GAAP Reconciliation
22 Notes: Non-GAAP Reconciliation The Company uses certain “Non-GAAP” financial measures as defined by the Securities and Exchange Commission. These are measures of performance not defined by accounting principles generally accepted in the United States, and should be considered in addition to, not
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