Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q4 2018 Earnings Presentation
24 slides from Archer-daniels-midland's earnings presentation, Feb 5, 2019
Slide 1: Fourth Quarter 2018 Earnings Conference Call
Fourth Quarter 2018 Earnings Conference Call February 5, 2019
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: Highlights from 2018
3 Highlights from 2018 • Bolivian divestiture • Operational excellence run- • 5 new/renovated plants, 3 • Optimization of U.S. rate cost savings of more labs and innovation centers Origination footprint than $300M, exceeding • GrainBridge, SoyVen, Aston target for full year JVs • Turnarounds in Glob
Slide 4: Readiness Starts to Contribute
44 Readiness Starts to Contribute Targets Key Focus Areas 525 • Data and analytics via Prioritized Initiatives 1ADM 120 • Process simplification $1B and standardization Run Rate $300M • Behavioral and cultural change 32,000 Participation in ADM ~2,000 Ability to Execute Training
Slide 5: Q4 2018 Financial Highlights
5 Q4 2018 Financial Highlights Quarter Ended Dec. 31 (Amounts in millions except per share data and percentages) 2018 2017 Change Adjusted earnings per share (1) (2) $0.88 $0.82 $0.06 Adjusted segment operating profit (1) (3) $860 $793 $67 Trailing 4Q average adjusted ROIC (1) 8.3% 6.4% +190bps Annu
Slide 6: Segment Operating Profit and Corporate Results
6 Segment Operating Profit and Corporate Results Quarter Ended Dec. 31 (Amounts in millions) 2018 2017 Change Total Segment Operating Profit(1) $ 786 $ 733 $ 53 Specified items: (Gains) loss on sales of assets and businesses 8 (2) 10 Impairment and restructuring charges 66 62 4 Adjusted Segment Oper
Slide 7: Balanced Use of Cash Between Investments and Return of Capital to Shareholders
7 Balanced Use of Cash Between Investments and Return of Capital to Shareholders Years Ended Dec. 31 (Amounts in millions) 2018 2017 Cash from operations before working capital changes $2,672 $1,895 Changes in working capital(1) 382 316 Purchases of property, plant and equipment (842) (1,049) Net as
Slide 8: Maintained Solid Balance Sheet
8 Maintained Solid Balance Sheet (Amounts in millions) Dec. 31, 2018 Dec. 31, 2017 Cash⁽¹⁾ $2,003 $804 Net property, plant, and equipment 9,953 10,138 Operating working capital⁽²⁾ 7,499 7,421 - Total inventories 8,813 9,173 Total debt 8,388 7,493 - CP outstanding — 700 Shareholders’ Equity 18,996 18
Slide 9: Q4 Adjusted Segment OP $860 million; Full Year Up 26% YOY
9 Q4 Adjusted Segment OP $860 million; Full Year Up 26% YOY Adjusted segment operating profit (in millions) Excludes specified items and timing effects Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 $793 $717 $924 $861 $860* Adjusted Segment Operating Profit Calendar Year 2018 2017 Origination $ 546 $ 404
Slide 10: Origination: Solid Performance in Dynamic Global Environment
10 Origination: Solid Performance in Dynamic Global Environment Segment operating profit (in millions) Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 • North American export margins up $261 $45 $189 $129 $183 YOY • Comparable YOY NA export volumes, despite lack of exports to China • Good execution in Globa
Slide 11: Oilseeds: Outstanding Q4 Results, More than Doubled YOY
11 Oilseeds: Outstanding Q4 Results, More than Doubled YOY Segment operating profit (in millions) Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 • C&O: continued to capitalize on $201 $350 $343 $349 $432 solid meal demand and strong crush margins • RPBO: Strong biodiesel volumes and margins, higher food oi
Slide 12: Carbohydrate Solutions: Solid NA S&S Volumes, Ethanol Challenges
12 Carbohydrate Solutions: Solid NA S&S Volumes, Ethanol Challenges Segment operating profit (in millions) Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 • NA S&S volumes solid $285 $213 $247 $288 $197 • Lower S&S margins and sales in EMEA; higher COGS in NA, in part due to lower Decatur production rates •
Slide 13: Nutrition: WFSI Strong, Sales Up; Continued Lysine Challenges
13 Nutrition: WFSI Strong, Sales Up; Continued Lysine Challenges Segment operating profit (in millions) Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 $73 $96 $114 $67 $62 • WFSI sales 14% higher YOY on constant currency basis; organic sales up 8% • New wins, acquisitions contributing to WILD and Health &
Slide 14: Drivers of Profit and Cash Flow Growth
14 Drivers of Profit and Cash Flow Growth Business Harvesting Turnarounds Growth Investments Well-positioned for profit growth in 2019 and beyond
Slide 15: Upcoming Investor Events
15 Upcoming Investor Events Morgan Stanley Chemicals & Agriculture Corporate Access Day New York, NY February 14 Bank of America/Merrill Lynch Global Agriculture and Materials Conference Ft. Lauderdale, FL February 27-28
Slide 16: Appendix
Appendix
Slide 17: GAAP Statement of Earnings Summary
17 GAAP Statement of Earnings Summary (Amounts in millions except per share data) Quarter Ended Dec. 31 (Amounts in millions except per share data) 2018 2017 Change Revenues $15,947 $16,070 ($123) Gross profit 1,053 942 111 Selling, general and administrative expenses 558 459 99 Asset impairment, ex
Slide 18: Adjusted Earnings Per Share (EPS)
18 Adjusted Earnings Per Share (EPS) (Amounts in millions except per share data) Quarter Ended Dec. 31 2018 2017 Pre-tax After-tax Per share Pre-tax After-tax Per share Earnings and EPS (fully diluted) as reported $ 312 $ 315 $ 0.55 $ 543 $ 788 $ 1.39 Adjustments LIFO (credit)/charge (4) (3) — 2 1 —
Slide 19: ROIC versus WACC
19 ROIC versus WACC Q4 CY18 (1)(2) LT ROIC Objective: 10% Trailing 4Q Average Adjusted ROIC Annual WACC 8.3% 6.25% Trailing 4Q Average Adjusted EVA $557M 11% Long-Term WACC 7.0% Trailing 4Q Average ROIC (1)(3) 7.6% 10% 9% 8% 7% 6% 5% 4% Q4 Q4 Q4 Q4 Q4 CY14 CY15 CY16 CY17 CY18 Trailing 4Q Average ROI
Slide 20: Return on Invested Capital
20 Return on Invested Capital Adjusted ROIC Earnings(1) (Amounts in millions) Four Quarters Quarter Ended Ended Mar. 31, 2018 June 30, 2018 Sep. 30, 2018 Dec. 31, 2018 Dec. 31, 2018 Net earnings attributable to ADM $ 393 $ 566 $ 536 $ 315 $ 1,810 Adjustments Interest expense 91 89 87 97 364 LIFO cha
Slide 21: Segment OP and Adjusted OP Comparatives Introducing New Segments
21 Segment OP and Adjusted OP (a non-GAAP measure) Comparatives Introducing New Segments (Amounts in millions) 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 Reporte
Slide 22: Segment OP and Adjusted OP as Currently Reported vs Previous Segments
22 Segment OP and Adjusted OP (a non-GAAP measure) as Currently Reported vs Previous Segments (Amounts in millions) Quarter Ended December 31, 2018 As Currently Pro As Currently Reported Pro Forma Reported Forma Segment Operating Profit(1) Segment Operating Profit(1) $ 786 $ 786 Specified items: Spe
Slide 23: Processed Volumes (by commodity)
23 Processed Volumes (by commodity) Metric Tons Processed (000s) Calendar Year 2013 2014 2015 2016 2017 2018 Oilseeds 31,768 32,208 33,817 33,788 34,733 36,308 Corn 23,688 23,668 23,126 22,273 22,700 22,343 55,456 55,876 56,943 56,061 57,433 58,651 CY17 CY18 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Oilseeds 8,818 8,
Slide 24: Notes: Non-GAAP Reconciliation
24 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
Archer-Daniels-Midland Company — Q4 2018 Earnings Presentation on 6ix