Archer-Daniels-Midland Company · NYSE:ADM
Archer-Daniels-Midland — Q2 2020 Earnings Presentation
48 slides from Archer-Daniels-Midland's earnings presentation, 2020
Slide 1: Unlocking Nature. Enriching Life. Second Quarter 2020
Unlocking Nature. Enriching Life. Second Quarter 2020
Slide 2: Forward-looking statements
2 Some of our comments and materials in this presentation 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 and materials are based on many ass
Slide 3: Agenda
3 The ADM Vision What We Do Financial Results Why Invest in ADM? How We Do It Why Invest in ADM? The ADM Edge Corporate Responsibility The ADM Plan
Slide 4: The ADM Vision, Why Invest in ADM, The ADM Edge, The ADM Plan
4 The ADM Vision Why Invest in ADM? The ADM Edge The ADM Plan
Slide 5: Our beliefs and why we exist
5 It sustains us, fulfills us and fuels our well-being. It’s the most basic need with the most critical impact. ADM is devoted to that impact every single day. We believe… Everyone has the right to Food derived from nature is Access to nutrition has the the food they need to an important driver of p
Slide 6: The ADM Edge
6 Unparalleled Industry-leading Leading-edge Focused on Unwavering global portfolio of technical returns/EVA commitment footprint ingredients and ingenuity to corporate solutions responsibility • We are a global leader in nutrition, serving the needs of emerging and developed markets. Uniquely capab
Slide 7: ADM fundamentals, financials and credentials
7 FUNDAMENTALS FINANCIALS CREDENTIALS 800+ 50+ $65B ~$26B 1902 Facilities Innovation CY19 Revenue Market Cap Founded Centers as of 12/31/2019 347 200 ~$3.1B 88 ADM Food & Feed Countries Served CY19 Adjusted Consecutive NYSE Since 1924 Processing Locations Segment OP Years of Dividends 482 38,100 $3.
Slide 8: The ADM Plan
8 Reduce costs Innovate new specialty and Increase the financial strength of ingredient products each business Implement 1ADM Enhance our talent, capabilities Divest those that don't meet Leverage technology to and geographic footprint’ returns expectations streamline and drive effectiveness Impleme
Slide 9: Adjusted ROIC and EVA strategic direction
9 Adjusted ROIC Adjusted EVA @ 7% WACC 2013: Pre-Wild 6.6% $(110M) Delivered $9.8B to shareholders through 2020 Q1: Trailing 4 Qtr Avg 7.6% $186M dividends and share repurchases since 2014 2023: Post Harvest Target >10% >$1.0B Tailored Strategies for Core Businesses vs. Nutrition Businesses, with a
Slide 10: Acquisitions, JVs and divestitures
10 Gleadell Acquisitions and JVs Morocco Eaststarch SA Groundnut Texoma Peanut Co 2014 2015 2016 2017 2018 2019 2020 Divestitures Lactic Acid Brazil Crop Risk Cocoa Sugar GrainCorp Bolivia Oilseeds CIP Services Fertilizer Chocolate New Hope Ag Fund Sale
Slide 11: Readiness run rate savings
11 Run Rate Savings Target $815M $1.2B Readiness is a reinvention of our business from the bottom up. Achieved It provides a structure for ongoing Through continuous improvement that will give us Q1 2020 the tools to deliver an excellent customer $920M experience at the lowest cost. It incorporates
Slide 12: What We Do, How We Do It, Corporate Responsibility
12 What We Do How We Do It Corporate Responsibility
Slide 13: Origination, processing and specialties value chain
13 Origination of Crops Processing Specialties Ag Services Oilseeds Nutrition Oilseeds Procure/Store Grain Vegetable Other Meal Human Nutrition Oil Products Ingredients Carbohydrate Solutions Animal Nutrition Local Destination Exports Fuel & Other Ingredients Sales Marketing Starches & Other Flour I
Slide 14: Global macro trends and consumer culture
14 Consumption Contemporary We’re tracking large, transformative global macro trends as Identity Wellness to understand their impact on consumer culture and behaviors, market opportunities and, ultimately, spaces for category growth. Our focus on trends has been a guiding influence on our acquisitio
Slide 15: Ag Services and Oilseeds
Ag Services and Oilseeds g ADM
Slide 16: Ag Services and Oilseeds businesses
16 Refined Products Ag Services Crushing & Other Wilmar Drivers of Profitability Drivers of Profitability Drivers of Profitability Drivers of Profitability Procure, store, dry/blend, transport and Crush a diverse set of oilseeds to Refine and distribute bulk and 24.8% ownership stake in Wilmar expor
Slide 17: Ag Services & Oilseeds global footprint
17 Ag Services & Oilseeds Daily Grain Storage Capacity (MMT) Procurement and Global 12 Processing Storage Facilities Storage Capacity 3 Procurement 1 Processing EMEAI 7 Processing 6 Procurement 2 2 Processing 2 Procurement 7 Procurement SA Owned & Leased Port 12 Procurement 3 Facilities 7 Processing
Slide 18: Ag Services & Oilseeds adjusted operating profit
18 $2,500 $2,016 $1,723 $1,215 $1,229 $2,020 $1,935 $422 $2,000 $183 $343 $267 $376 $200 $1,500 Millions $370 $274 $586 $664 $154 $329 $1,000 $650 $652 $298 $244 $580 $298 Wilmar $204 $500 $792 RP&O $657 $107 $597 $502 $81 $464 $451 Crushing $70 $164 Ag Services $0 CY14 CY15 CY16 CY17 CY18 CY19 CY 2
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Slide 20: Starches & Sweeteners, Vantage Corn Processors
20 Starches & Sweeteners Vantage Corn Processors Starches Sweeteners Flours Corn Dry Mills Drivers of Profitability Drivers of Profitability Drivers of Profitability Drivers of Profitability Industrial starches Glucose, high fructose corn syrup, corn syrups, Wheat flours—bulk and packaged for Ethano
Slide 21: Carbohydrate Solutions footprint
21 Carbohydrate Solutions Annual Corn Grind (MMT) Different Products EMEAI 1 Owned Processing Plants 8 Processing 23 2 Procurement 7 Processing 4 Procurement NA Corn Wheat 22 Additional Joint Venture Facilities in Mexico, Hungary, Russia and U.S. 1 Processing 1 Processing Annual Wheat Milling Capaci
Slide 22: Carbohydrate Solutions adjusted operating profit
22 $1,340 $823 $1,000 $1,083 $945 $644 $68 $1,400 $1,000 $719 $155 $129 $51 Millions $136 $600 $871 $928 $894 $686 $753 $621 Bioproducts/ $200 Vantage Corn Processors (VCP) $99 Starches & Sweeteners $0 ($109) ($31) ($200) CY14 CY15 CY16 CY17 CY18 CY19 CY 20 (YTD Q1) Note: Adjusted Operating Profit i
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Slide 24: Human Nutrition and Animal Nutrition
24 Human Nutrition Animal Nutrition Flavors & Colors Specialty Ingredients Health & Wellness Drivers of Profitability Drivers of Profitability Drivers of Profitability Drivers of Profitability Natural flavors portfolio Specialty soy and pea proteins Nutritional supplements—probiotics, prebiotics, Co
Slide 25: Nutrition systems and ingredients
25 Systems Customized blend of ingredients designed for specific food or animal nutrition applications Manufacturer Specialty Hydrocolloids Polyols Streamlines customer’s Proteins ordering, testing, inventory Nutritional Probiotics & Edible Beans Supplements Enzymes & Peas and manufacturing Fiber Nu
Slide 26: Nutrition global footprint
26 Nutrition Human Nutrition 5 Processing 1 Processing 3 Processing Procurement Centers 1 Processing 8 Processing 2 Processing Customer Innovation Centers 14 Processing Research, Design and 3 Processing 1 Processing Development Centers 56 Processing 9 Processing 20 Procurement 1 Processing 3 Process
Slide 27: Nutrition revenue and adjusted operating profit
27 Revenue Adjusted Operating Profit $7,000 $500 $2,660 $3,590 $3,520 $3,520 $3,790 $5,680 $1,471 $258 $323 $273 $311 $339 $418 $142 $5,600 $400 $42 $21 $4,200 $2,930 $300 $27 $33 Millions Millions $1 $15 $1,220 $1,140 $1,060 $1,160 $2,800 $200 $376 $318 $1,233 $296 $272 $278 $243 $29 $1,400 $2,570
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Slide 29: Board of directors
29 Juan Luciano Donald Felsinger Michael Burke Terrell Crews Age 58 Age 72 Age 56 Age 64 Appointed 2014 Appointed 2009 Appointed 2018 Appointed 2011 Chairman, President & CEO, ADM Fmr. Chairman, President & CEO, Chairman & CEO, AECOM Fmr. CFO & Divisional CEO, Monsanto Exec. Committee Sempra Energy
Slide 30: Board statistics and committee responsibilities
30 Statistics Responsibilities Nominating & Compensation & Corporate Governance Succession • Authority to assign • Assesses potential risks oversight of specific areas associated with Overall Diversity Independent of risk to other committees compensation decisions • Recommends Director • Engages ind
Slide 31: Living up to our commitments
31 Our sustainability efforts are led by our Chief Sustainability Officer, who is guided by the Sustainability & Corporate Responsibility Board committee and by an ADM Executive Council Living up to our commitments committee. By 2035, ADM will: We address climate change through three main pathways:
Slide 32: Communities, diversity and safety
32 ADM continuously works to improve the lives of our stakeholders, including the communities in which we operate as well as our vast and diverse employee base. Helping Communities Promoting Ensuring Through ADM Cares Employee Diversity Employee Safety ADM Cares is our corporate social investment pr
Slide 33: Financial Results, Why Invest in ADM?
33 Financial Results Why Invest in ADM?
Slide 34: Adjusted operating profit and adjusted EPS
34 $4.0 $3.7 $2.9 $2.6 $2.7 $3.4 $3.1 $0.6 $4.00 $0.1 $0.3 $0.1 $3.50 $0.3 $3.50 $3.0 $0.1 $0.1 $3.23 $0.4 $1.3 $0.3 $0.1 $0.1 $3.24 $0.3 $0.9 $0.3 $3.00 $0.6 $0.8 $2.0 $2.61 Billions $1.0 $1.1 $2.50 $2.16 $2.43 $1.0 $2.0 $2.0 $1.9 $1.7 $2.00 $0.0 $1.2 $1.2 $0.1 $0.1 $0.4 $0.0 $1.50 CY14 CY15 CY16 C
Slide 35: Adjusted operating profit by segment
35 Adjusted Operating Profit CY14 CY15 CY16 CY17 CY18 CY19 CY20 (Q1 YTD) Total (in millions) 3,693 2,925 2,621 2,674 3,362 3,082 643 Ag Services & Oilseeds 2,016 1,723 1,215 1,229 2,020 1,935 422 Ag Services 792 597 464 451 657 502 164 Crushing 664 652 298 204 650 580 70 RP&O 376 274 298 244 370 586
Slide 36: Adjusted segment EBITDA
36 Adjusted Segment EBITDA CY17 CY18 CY19 CY20 (Q1 YTD) Total (in millions) 3,064 3,634 3,482 726 Ag Services & Oilseeds 1,620 2,410 2,311 514 Carbohydrate Solutions 1,415 1,282 974 148 Nutrition 450 486 642 199 Other 69 92 117 15 Corporate (490) (636) (562) (150)
Slide 37: Volumes processed: oilseeds and corn
37 2014 2015 2016 2017 2018 2019 Total (000’s of metric tons) 55,876 56,943 56,061 57,433 58,651 58,350 Oilseeds 32,208 33,817 33,788 34,733 36,308 36,271 Corn 23,668 23,126 22,273 22,700 22,343 22,079 CY 19 CY 20 Q1 Q2 Q3 Q4 Q1 Total (000’s of metric tons) 14,299 14,319 14,681 15,051 14,697 Oilseed
Slide 38: LT ROIC objective: 10%
38 LT ROIC Objective: 10% 11% 10% Q1 CY20 9% Trailing 4Q Average 7.6% Adjusted ROIC 8% 7.6% Trailing 4Q 6.2% 7% Average ROIC 6.2% 6% Annual WAAC 5.75% 5% Trailing 4Q Average $538M 4% Adjusted EVA Q1'15 Q1'16 Q1'17 Q1'18 Q1'19 Q1'20 Long-Term WACC 7.0% Trailing 4Q Average ROIC Trailing 4Q Adjusted RO
Slide 39: Balance sheet highlights and other key data
39 Balance Sheet Highlights (in millions) Dec 31 Dec 31 Mar 31 Other Key Data 2018 2019 2020 Book Value Net Investment In: Cash & Cash Equivalents $1,997 $852 $4,734 Book Value Book Value Per Share Operating Working Capital $7,505 $7,970 $7,985 as of 3/31/20 as of 3/31/20 Property, Plant, & Equipmen
Slide 40: Capital allocation
40 $3.0 70% 60–70% 60% in strategic M&A $2.4 or return of capital to shareholders 50% $1.8 Billions 40% 30–40% $2.7 $2.7 30% reinvested Capex $1.2 $2.3 $2.2 $2.1 2.3 $1.9 20% $0.6 $0.8 10% $0.0 0% 2014 2015 2016 2017 2018 2019 Q1 2020 Historical Medium Term Capex M&A / Capital Return to Shareholders
Slide 41: Capex, D&A and M&A
41 $2.0 Capex and D&A M&A $3.0 $2.8 $1.5 $2.5 $2.0 $2.0 Billions Billions $1.0 $1.0 $0.9 $0.9 $0.9 $0.9 $0.9 $0.9 $0.9 $0.8 $0.8 $1.5 $0.9 $1.0 $0.5 $1.9 $1.6 $1.2 $1.5 $0.9 $0.9 $1.1 $0.9 $1 $0.8 $0.8 $0.5 $0.5 $0.2 $0.5 $0.2 $0.2 $0.2 $0.1 $0.2 $0.2 $0.1 $0.0 $0.0 $0.0 $0.0 FY09 FY10 FY11 FY12 CY1
Slide 42: Dividends and share repurchases
42 Annual Dividends Per Share Dividends & Share Repurchases $2.5 Dividend Payout Ratio: Historical: 20-30% Medium Term: 30-40% $2.0 $2.0 $1.5 $1.2 Billions USD $1.40 $1.44 $1.34 $1.0 $1.28 $1.20 $1.0 $1.12 $0.8 $0.96 $0.7 $0.7 $0.7 $0.8 $0.8 $0.6 $0.76 $0.5 $0.66 $0.70 $0.5 $0.60 $0.5 $0.4 $0.4 $0.3
Slide 43: Debt metrics and available liquidity
43 Debt Metrics Available Liquidity (Billions) 50% 5.0 $20.0 16.2 4.0 29% 10.6 25% 3.0 $10.0 2.3 2.0 0% 1.0 $0.0 Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 Q1'18 Q1'19 Q1'20 Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 Q1'18 Q1'19 Q1'20 Net Debt / Total Capital Net Debt to EBITDA Total Liquidity with RMI Liquidity
Slide 44: Why Invest in ADM: The ADM Edge
44 Unparalleled Industry-leading Leading-edge Focused on Unwavering global portfolio of technical returns/EVA commitment footprint ingredients and ingenuity to corporate solutions responsibility • We are a global leader in nutrition, serving the needs of emerging and developed markets. Uniquely capa
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Slide 46: Earnings as reported and specified items
46 Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended CY CY CY CY CY CY CY CY CY 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012 2013 2014 2015 2016 2017 2018 2019 2020 Earnings as Reported 383 511 451
Slide 47: Non-GAAP financial measures
47 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 in lieu of, GAAP reported measu
Slide 48: Thank You
Archer-Daniels-Midland Company — Q2 2020 Earnings Presentation on 6ix