Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Q2 2019 Earnings Presentation
25 slides from Archer-daniels-midland's earnings presentation, Aug 1, 2019
Slide 1: Second Quarter 2019 Earnings Conference Call
Second Quarter 2019 Earnings Conference Call August 1, 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: Second Quarter Accomplishments
3 Second Quarter Accomplishments • Completed significant • Announced Ag Services & • Completed Ziegler global organizational Oilseeds BU; centralized acquisition changes, including early Milling teams • Cut ribbon at Beijing flavor retirement • Realigned manufacturing center • Exchanged Midwest oper
Slide 4: Readiness: On Track to Deliver $250-300M in Benefits in 2019
44 Readiness: On Track to Deliver $250-300M in Benefits in 2019 Targets 650 Prioritized Initiatives 275 $1.2B Run Rate Savings $500M by end of 2020 $250-300M Accrued Benefits by end of 2019 $130M
Slide 5: Q2 2019 Financial Highlights
5 Q2 2019 Financial Highlights Quarter Ended June 30 (Amounts in millions except per share data and percentages) 2019 2018 Change Adjusted earnings per share (1) (2) $0.60 $1.02 -$0.42 Adjusted segment operating profit (1) (3) $682 $924 -$242 Trailing 4Q average adjusted ROIC (1) 6.9% 7.3% (40)bps A
Slide 6: Segment Operating Profit and Corporate Results
6 Segment Operating Profit and Corporate Results Quarter Ended June 30 (Amounts in millions) 2019 2018 Change Total Segment Operating Profit(1) $ 645 $ 902 $ (257) Specified item: Impairment, restructuring, and settlement charges 37 22 15 Adjusted Segment Operating Profit(1)(2) $ 682 $ 924 $ (242) O
Slide 7: Funded Acquisitions in 2019
7 Funded Acquisitions in 2019 Six Months Ended June 30 (Amounts in millions) 2019 2018 Cash from operations before working capital changes $1,016 $1,138 Changes in working capital(1) (116) (289) Purchases of property, plant and equipment (383) (379) Net assets of businesses acquired (1,944) — Sub-to
Slide 8: Maintained Solid Balance Sheet
8 Maintained Solid Balance Sheet (Amounts in millions) June 30, 2019 June 30, 2018 Cash⁽¹⁾ $853 $853 Net property, plant, and equipment 10,245 9,948 Operating working capital⁽²⁾ 7,804 7,718 - Total inventories 8,294 7,953 Total debt 9,412 7,623 - CP outstanding 1,479 692 Shareholders’ Equity 18,979
Slide 9: Q2 Adjusted Segment OP $682 million
9 Q2 Adjusted Segment OP $682 million Adjusted segment operating profit (in millions) Excludes specified items Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 $924 $861 $860 $608 $682* Origination Oilseeds Carbohydrate Solutions Nutrition Other *Segment operating profit as reported was $645M
Slide 10: Origination: Executed Well Despite Weather Impacts
10 Origination: Executed Well Despite Weather Impacts Segment operating profit (in millions) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 • NA export volumes and margins $191 $131 $184 $76 $71 down YOY on weather, lack of U.S. export competitiveness • ARTCO impacted by river conditions • Approximately $4
Slide 11: Oilseeds: Continued Solid Crush Margins in NA, EMEA
11 Oilseeds: Continued Solid Crush Margins in NA, EMEA Segment operating profit (in millions) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 • Strong demand supported crush $341 $347 $431 $341 $291 margins in NA and EMEA; $10M impact of weather-related production outages in NA • SA crush and origination ne
Slide 12: Carbohydrate Solutions: NA S&S Solid; Negative Industry ETOH Margins
12 Carbohydrate Solutions: NA S&S Solid; Negative Industry ETOH Margins Segment operating profit (in millions) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 • Continued growth in NA starch $247 $288 $197 $96 $192 volumes; NA sweetener margins solid • Challenging conditions for EMEA S&S • Industry ethanol
Slide 13: Nutrition: Up YOY, Benefited from Neovia Accretion
13 Nutrition: Up YOY, Benefited from Neovia Accretion Segment operating profit (in millions) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 $114 $67 $62 $81 $117 • WILD NA sales and margins strong, offset by EMEAI and APAC • SI impacted by isolated production shortfalls • Health & Wellness continued growth
Slide 14: Advancing Growth and Driving Returns
14 Advancing Growth and Driving Returns Business Harvesting Growth Turnarounds Investments Poised to Capitalize on Significant Market Opportunities for Earnings and Returns Growth in 2020 and Beyond
Slide 15: Our Key Beliefs and Our Noble Purpose
15 Our Key Beliefs and Our Noble Purpose OUR OUR BELIEFS PURPOSE Everyone has the right to the food they need to sustain their lives We unlock the Food derived from nature power of nature is an important driver of health & wellness to enrich the Access to nutrition has quality of life the power to s
Slide 16: Upcoming Investor Event
16 Upcoming Investor Event JP Morgan U.S. All Stars Conference September 17-18 London, England
Slide 17: Appendix
Appendix
Slide 18: GAAP Statement of Earnings Summary
18 GAAP Statement of Earnings Summary (Amounts in millions except per share data) Quarter Ended June 30 (Amounts in millions except per share data) 2019 2018 Change Revenues $16,297 $17,068 ($771) Gross profit 972 1,181 (209) Selling, general and administrative expenses 602 560 42 Asset impairment,
Slide 19: Adjusted Earnings Per Share (EPS)
19 Adjusted Earnings Per Share (EPS) (Amounts in millions except per share data) Quarter Ended Jun. 30 2019 2018 Pre-tax After-tax Per share Pre-tax After-tax Per share Earnings and EPS (fully diluted) as reported $ 274 $ 235 $ 0.42 $ 652 $ 566 $ 1.00 Adjustments LIFO (credit)/charge 25 19 0.03 (13)
Slide 20: ROIC versus WACC
20 ROIC versus WACC Q2 CY19 (1)(2) LT ROIC Objective: 10% Trailing 4Q Average Adjusted ROIC Annual WACC 6.9% 6.75% Trailing 4Q Average Adjusted EVA $42M 11% Long-Term WACC 7.0% Trailing 4Q Average ROIC (1)(3) 5.9% 10% 9% 8% 7% 6% 5% 4% Q2 Q2 Q2 Q2 Q2 CY15 CY16 CY17 CY18 CY19 Trailing 4Q Average ROIC
Slide 21: Return on Invested Capital
21 Return on Invested Capital Adjusted ROIC Earnings(1) (Amounts in millions) Four Quarters Quarter Ended Ended Sep. 30, 2018 Dec. 31, 2018 Mar. 31, 2019 June 30, 2019 June 30, 2019 Net earnings attributable to ADM $ 536 $ 315 $ 233 $ 235 $ 1,319 Adjustments Interest expense 87 97 101 109 394 LIFO c
Slide 22: Segment OP and Adjusted OP Comparatives Introducing New Segments
22 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, 2018 Jun. 30, 2018 Sep. 30, 2018 Dec. 31, 2018 Dec. 31, 2018 As Pro As Pro As Pro As Pro As Pro As Pro Reported Forma Reported Forma Reported Forma
Slide 23: Segment OP and Adjusted OP as Currently Reported vs New Segments
23 Segment OP and Adjusted OP (a non-GAAP measure) as Currently Reported vs New Segments Quarter Ended Quarter Ended Six Months Ended March 31, 2019 June 30, 2019 June 30, 2019 As Currently Pro As Currently Pro As Currently Pro As Currently Reported Pro Forma Reported Forma Reported Forma Reported F
Slide 24: Processed Volumes (by commodity)
24 Processed Volumes (by commodity) Metric Tons Processed (000s) 2014 2015 2016 2017 2018 Oilseeds 32,208 33,817 33,788 34,733 36,308 Corn 23,668 23,126 22,273 22,700 22,343 55,876 56,943 56,061 57,433 58,651 CY17 CY18 CY19 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Oilseeds 8,818 8,519 8,265 9,131 9,047 9,075 9
Slide 25: Notes: Non-GAAP Reconciliation
25 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 — Q2 2019 Earnings Presentation on 6ix