Archer-Daniels-Midland Company · NYSE:ADM
Archer-Daniels-Midland — Investor Presentation (August 2020)
48 slides from Archer-Daniels-Midland's investor presentation, August 2020
Slide 1: Unlocking Nature. Enriching Life.
Unlocking Nature. Enriching Life. Third Quarter 2020
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement 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
Slide 3: Table of Contents
3 Table of Contents Unlock Enrich Invest 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: Unlock
4 Unlock The ADM Vision Why Invest in ADM? The ADM Edge The ADM Plan
Slide 5: Food is Fundamental.
5 The ADM Vision Food is It sustains us, fulfills us and fuels our well-being. It’s the most basic need with the most critical impact. ADM is Fundamental. 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 t
Slide 6: Why Invest in ADM?
6 Why Invest in ADM? Why Invest in ADM? From the seed of the idea to ADM Advantage the outcome of the solution, Unparalleled Industry-leading Leading-edge Focused on Unwavering ADM provides access to global portfolio of technical returns/EVA commitment nutrition worldwide. footprint ingredients and
Slide 7: ADM by the Numbers
7 The ADM Edge ADM by the Numbers 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 Y
Slide 8: Long-Term Strategy
8 The ADM Plan Long-Term Strategy 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
Slide 9: Tailored Strategy Focused on Targeted Growth, Returns and EVA
9 The ADM Plan Tailored Strategy Focused on Targeted Growth, Returns and EVA Adjusted ROIC Adjusted EVA @ 7% WACC 2013: Pre-Wild 6.6% $(110M) 2020 Q2: Trailing 4 Qtr Avg 8.1% $305M Delivered $10.0B to shareholders through dividends and share repurchases since 2014 2023: Post Harvest Target >10% >$1.
Slide 10: Transforming the Portfolio
10 The ADM Plan Transforming the Portfolio 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 is Transforming How We Operate
11 The ADM Plan Readiness is Transforming How We Operate 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 Q2 2020 the tools to deliver an excellent customer
Slide 12: Enrich
12 Enrich What We Do How We Do It Corporate Responsibility
Slide 13: Serve Customers Across the Value Chain with Unmatched Products & Services
13 What We Do Serve Customers Across the Value Chain with Unmatched Products & Services Origination of Crops Processing Specialties Ag Services Oilseeds Nutrition Oilseeds Procure/Store Grain Vegetable Other Meal Oil Products Human Nutrition Ingredients Carbohydrate Solutions Animal Nutrition Local
Slide 14: ADM Global Trends Program
14 What We Do ADM Global Trends Program 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
Slide 15: Ag Services and Oilseeds
15 Ag Services and Oilseeds
Slide 16: Ag Services and Oilseeds Overview
16 How We Do It: Ag Services and Oilseeds Ag Services and Oilseeds Overview 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 oilseed
Slide 17: Footprint
17 How We Do It: Ag Services and Oilseeds Ag Services & Oilseeds Footprint Daily Grain Storage 451 19.1 MMT Capacity (MMT) GERMANY Procurement and Global 12 Processing UKRAINE Storage Facilities Storage Capacity POLAND NETHERLANDS 2 Processing 3 Procurement 7 Processing 1 Processing 6 Procurement RU
Slide 18: Adjusted Operating Profit
18 How We Do It: Ag Services and Oilseeds Adjusted Operating Profit $2,500 $2,016 $1,723 $1,215 $1,229 $2,020 $1,935 $835 $2,000 $183 $343 $267 $376 $200 $1,500 $370 Millions $274 $586 $664 $154 $329 $1,000 $650 $652 $298 $244 $580 $158 $298 $159 Wilmar $500 $204 $792 $183 RP&O $597 $657 $464 $451 $
Slide 19: Carbohydrate Solutions
Carbohydrate Solutions ADM
Slide 20: Carbohydrate Solutions Overview
20 How We Do It: Carbohydrate Solutions Carbohydrate Solutions Overview 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 fructo
Slide 21: Footprint
21 How We Do It: Carbohydrate Solutions Footprint Annual Corn Grind (MMT) Carbohydrate Solutions ~30 Different Products EMEAI 1 Owned Processing CANADA Plants 8 Processing UNITED 23 2 Procurement KINGDOM 7 Processing 11 45 4 Procurement NA Corn Wheat 22 Additional Joint Venture Facilities in BULGARI
Slide 22: Adjusted Operating Profit
22 How We Do It: Carbohydrate Solutions Adjusted Operating Profit $1,340 $823 $1,000 $1,083 $945 $644 $263 $1,400 $1,000 $719 $155 $129 $51 Millions $136 $600 $871 $928 $894 $753 $621 $686 Bioproducts/ $200 Vantage Corn Processors (VCP) $276 Starches & Sweeteners $0 ($109) ($13) ($200) CY14 CY15 CY1
Slide 23: Nutrition
23 Nutrition
Slide 24: Nutrition Overview
24 How We Do It: Nutrition Nutrition Overview 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 Nutriti
Slide 25: Fulfilling Nutritional Needs with Innovative Solutions
25 How We Do It: Nutrition Fulfilling Nutritional Needs with Innovative Solutions Systems Customized blend of ingredients designed for specific food or animal nutrition applications Manufacturer Specialty Hydrocolloids Polyols Streamlines customer’s Proteins Nutritional Probiotics & ordering, testin
Slide 26: Footprint
26 How We Do It: Nutrition Footprint Nutrition Human Nutrition CANADA 5 Processing UNITED KINGDOM NETHERLANDS 20 1 Processing 3 Processing Procurement Centers BELGIUM 1 Processing GERMANY 8 Processing POLAND 50+ FRANCE 2 Processing Customer Innovation Centers 14 Processing SPAIN 30+ SWITZERLAND Rese
Slide 27: Revenue and Adjusted Operating Profit
27 How We Do It: Nutrition Revenue and Adjusted Operating Profit Revenue Adjusted Operating Profit $7,000 $500 $2,660 $3,590 $3,520 $3,520 $3,790 $5,680 $2,908 $258 $323 $273 $311 $339 $418 $300 $5,600 $400 $42 $21 $4,200 $2,930 $300 $27 $33 Millions Millions $1 $56 $15 $1,220 $1,140 $1,060 $1,160 $
Slide 28: Corporate Responsibility
28 Corporate Responsibility
Slide 29: ADM's Independent and Diverse Board
29 Corporate Responsibility ADM’s Independent and Diverse Board 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.
Slide 30: ADM's Independent and Diverse Board
30 Corporate Responsibility ADM’s Independent and Diverse Board Statistics Responsibilities Nominating & Compensation & Corporate Governance Succession • Authority to assign • Assesses potential risks 55% 91% oversight of specific areas associated with Overall Diversity Independent of risk to other
Slide 31: Environmental and Sustainability Highlights
31 Corporate Responsibility Environmental and Sustainability Highlights 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 20
Slide 32: Social Initiatives
32 Corporate Responsibility Social Initiatives 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
Slide 33: Invest
33 Invest Financial Results Why Invest in ADM?
Slide 34: Adjusted Segment Operating Profit and Adjusted EPS
34 Financial Results Adjusted Segment Operating Profit Adjusted Earnings Per Share $4.0 $3.7 $2.9 $2.6 $2.7 $3.4 $3.1 $1.4 $4.00 $0.1 $0.3 $0.1 $3.50 $3.50 $3.0 $0.3 $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 $0.0 $0.3 $2.16 $2.4
Slide 35: Adjusted Segment Operating Profit
35 Financial Results Adjusted Segment Operating Profit Adjusted Operating Profit CY14 CY15 CY16 CY17 CY18 CY19 CY20 (Q2 YTD) Total (in millions) 3,693 2,925 2,621 2,674 3,362 3,082 1,447 Ag Services & Oilseeds 2,016 1,723 1,215 1,229 2,020 1,935 835 Ag Services 792 597 464 451 657 502 335 Crushing 6
Slide 36: Adjusted EBITDA
36 Financial Results Adjusted EBITDA Adjusted Segment EBITDA CY17 CY18 CY19 CY20 (Q2 YTD) Total (in millions) 3,064 3,634 3,482 1,616 Ag Services & Oilseeds 1,620 2,410 2,311 1,016 Carbohydrate Solutions 1,415 1,282 974 422 Nutrition 450 486 642 416 Other 69 92 117 54 Corporate (490) (636) (562) (29
Slide 37: Processed Volumes
37 Financial Results Processed Volumes By Year 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 By Quarter CY19 CY20 Q1 Q2 Q3 Q4 Q1 Q2 Total (000’s of
Slide 38: ROIC vs WACC
38 Financial Results ROIC vs WACC LT ROIC Objective: 10% 11% 10% Q2 CY20 9% Trailing 4Q Average 8.1% Adjusted ROIC 8% 8.1% Trailing 4Q 6.9% 7% 6.9% Average ROIC 6% Annual WACC 5.75% 5% Trailing 4Q Average $683M 4% Adjusted EVA Q2'15 Q2'16 Q2'17 Q2'18 Q2'19 Q2'20 Long-Term WACC 7.0% Trailing 4Q Avera
Slide 39: Strong Balance Sheet
39 Financial Results Strong Balance Sheet Balance Sheet Highlights (in millions) Dec 31 Dec 31 Jun 30 Other Key Data 2018 2019 2020 Net Investment In: Book Value Cash & Cash Equivalents $1,997 $852 $1,203 $19.3B $34.73 Book Value Book Value Per Share Operating Working Capital $7,505 $7,970 $8,540 as
Slide 40: Cash from Operations and Balanced Capital Allocation Framework
40 Financial Results Cash from Operations Before Balanced Capital Working Capital Changes Allocation Framework $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% $1.6 $0.6 10% $0.
Slide 41: Capital Expenditures and M&A
41 Financial Results Capital Expenditures and M&A $2.0 Capex and D&A M&A $3.0 $2.8 $1.5 $2.5 $2.0 $2.0 Billions $1.0 Billions $1.0 $0.9 $0.9 $0.9 $0.9 $0.9 $0.9 $0.9 $0.9 $0.8 $0.8 $1.5 $0.5 $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 $0.4 $0.5 $0.5 $0.5 $0.2 $0.2 $0.2 $0.2 $0.1 $
Slide 42: Steadily Increasing Dividends
42 Financial Results Steadily Increasing Dividends 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 $1.0 $1.20 $1.12 $0.8 $0.96 $0.7 $0.7 $0.7 $0.8 $0.8 $0.6 $0.76
Slide 43: Balance Sheet Strength-Solid Investment Grade
43 Financial Results Balance Sheet Strength-Solid Investment Grade Debt Metrics Available Liquidity (Billions) 50% 5.0 $20.0 15.5 4.0 29% 10.9 25% 3.0 $10.0 2.13 2.0 0% 1.0 $0.0 Q2'12 Q2'13 Q2'14 Q2'15 Q2'16 Q2'17 Q2'18 Q2'19 Q2'20 Q2'12 Q2'13 Q2'14 Q2'15 Q2'16 Q2'17 Q2'18 Q2'19 Q2'20 Net Debt / Tot
Slide 44: Why Invest in ADM?
44 Why Invest in ADM? Why Invest in ADM? From the seed of the idea to ADM Advantage the outcome of the solution, Unparalleled Industry-leading Leading-edge Focused on Unwavering ADM provides access to global portfolio of technical returns/EVA commitment nutrition worldwide. footprint ingredients and
Slide 45: Appendix
45 Appendix
Slide 46: Summary of Specified Items Excluded in Adjusted Earnings
46 Financial Results Summary of Specified Items Excluded in Adjusted Earnings 1 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 Q1 Q2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201
Slide 47: Notes: Non-GAAP Reconciliation
47 Financial Results 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
Slide 48: Thank You
Thank You
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