Archer-daniels-midland Company · NYSE:ADM
Archer-daniels-midland — Investor Day (December 2021)
137 slides from Archer-daniels-midland's investor day presentation, Dec 10, 2021
Slide 1: Global Investor Day 2021
[J ADM Global Investor Day 2021
Slide 2: Safe Harbor Statement
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 a
Slide 3: Agenda and Speakers
Segment Speaker Welcome Vikram Luthar Transformation Review Juan Luciano and Strategic Growth Outlook Greg Morris Ag Services & Oilseeds Veronica Braker Chris Cuddy Carbohydrate Solutions Todd Werpy Ian Pinner Break Vince Macciocchi Positioned for Sustainable Nutrition Marie Wright Leticia Gonçalves
Slide 4: Juan Luciano
Juan Luciano Chairman of the Board of Directors and Chief Executive Officer
Slide 5: We Have Built a Better ADM Positioned for Growth
We Have Built a Better ADM Significant Upside Positioned for Growth Potential Based on Enduring Global Trends
Slide 6: A Culture of Execution and Innovation
A Culture of Execution and Innovation
Slide 7: Our Purpose
OUR PURPOSE To unlock the power of nature, to enrich the quality of life
Slide 8: ADM Cares
OUR PURPOSE To unlock the power of nature, to enrich the quality of life ADM Cares
Slide 9: The Path to Sustainable Long-Term Growth 2011-2014
The Path to Sustainable Long-Term Growth Actions Results Capital Taken Achieved • Reduced capex • Stabilized company Cost • Quick portfolio actions performance • ROIC > WACC • Operational excellence Cash • Billion-dollar challenge 2011-2014 Fit for the Journey
Slide 10: The Path to Sustainable Long-Term Growth 2015-2020
The Path to Sustainable Long-Term Growth Actions Results Achieved OPTIMIZE Taken by 2021 • Improve levers • $4.00-4.50 EPS under our control • ~10% ROIC • M&A and organic/ DRIVE bolt-on growth • Built Nutrition business • Readiness EXPAND 2015-2020 Improving Returns, Creating Value
Slide 11: Maintaining Balanced Capital Allocation and Shareholder Value
Maintaining Balanced Capital Allocation and Shareholder Value 2015-2020 Operating Cash Flows Dividends (Before Working Capital Strategic and Share Capital Changes) Expenditures M&A Repurchases $14.3B $5.5B $3.2B $8.6B (30-40%) (60-70%)
Slide 12: Built a Better ADM
Built a Better ADM $4.00-$4.50 Readiness transformation program $3.00 Premier global human and animal nutrition business Improved quality of earnings Reduced exposure to volatile parts of business portfolio New revenue streams Previous Baseline 2021 Normalized Baseline
Slide 13: Positioned for Growth Based on Enduring Global Trends
We Have Built a Better ADM Significant Upside Positioned for Growth Potential Based on Enduring Global Trends
Slide 14: Food Security, Health and Well-being, Sustainability
Food Health and Security Well-being Sustainability
Slide 15: The challenge of a lifetime
The challenge of a lifetime. A challenge made for ADM.
Slide 16: Food Security
Food Security
Slide 17: Demand
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Slide 18: Supply
Supply
Slide 19: ADM Footprint
ADM Footprint v
Slide 20: Health and Well-being
Health and Well-being
Slide 21: Global Innovation and Collaboration Centers
Global Innovation and Collaboration Centers EUROPE, MIDDLE EAST, AFRICA, INDIA 20 NORTH AMERICA 29 ASIA PACIFIC 7 SOUTH AMERICA 5
Slide 22: Sustainability
Sustainability = ss
Slide 23: Sustainability
Sustainability 15% 27% 3.5MMT Reduction in Reduction in CO2 CO2 Stored via Greenhouse Gas Emissions Carbon Capture Intensity Per Employee & Sequestration
Slide 24: Sustainability: Deforestation Free by 2030
Sustainability Deforestation Free by 2030
Slide 25: Sustainability: Greenhouse Gas Emissions
Sustainability Scope 3 Greenhouse Gas Emissions 25% Reduction by 2035
Slide 26: Sustainability
Sustainability 30% 5B 4B 10.3% Global Gallons Gallons CAGR in Consumers Pay Renewable Sustainable Sustainable More for Green Diesel Aviation Fuel Packaging Socially by 2025 by 2030 Segment Responsible through 2025 Products
Slide 27: Our Portfolio Aligned to Macro Trends
Our Portfolio Aligned to Macro Trends 2014 2021 2025 9% 19% 4% 11% 71% 66% 52% 22% Health and Well-being Food Security Sustainability
Slide 28: The Path to Sustainable Long-Term Growth
The Path to Sustainable Long-Term Growth Productivity Innovation Efforts Efforts • Centers of Excellence • Destination Marketing • 1ADM • Consumer Insights • Applying Technology • Where to Play / How to Win • Advanced Analytics • New Ways to Market 2021-2025 Sustainable Growth
Slide 29: Strategic Transformation
Strategic Transformation MARKET FORCES $1.1B + $1.1B > ($1.0B) Operating Profit Growth $1.2B 2025 EPS Range $6-$7
Slide 30: AS&O, Carb Solutions, Nutrition
Carb AS&O Solutions Nutrition Strengthen Evolve Grow
Slide 31: Greg A. Morris
Greg A. Morris Senior Vice President and President, Ag Services & Oilseeds
Slide 32: We Have Built a Better Ag Services & Oilseeds Business
We Have Built a Better Ag Services & Oilseeds Business
Slide 33: $1B in Capital Reductions
Divested Underperforming and Volatile Assets $1B in Capital Reductions
Slide 34: Expanded Strategically
Expanded Strategically $50M Run-rate OP from Algar and SoyVen
Slide 35: Added Adjacent Products and Services
Added Adjacent Products and Services $50M Additional OP from Adjacent Businesses and Services
Slide 36: Increased Wilmar Ownership
Increased Wilmar Ownership ~ $370M OP from Wilmar More than Double since 2014
Slide 37: Originated Volumes and Crush Volumes Up
Since 2014 Originated Volumes Up Crush Volumes Up 10% ($500M) 20% 15% Less in Fixed Assets
Slide 38: More Diversified Origination Volumes
More Diversified Origination Volumes 2014 2020 South America South America North America North EMEAI America EMEAI Other APAC Other
Slide 39: Ag Services & Oilseeds
2019 Origination + Oilseeds Ag Services & Oilseeds
Slide 40: Trading with a Purpose
Trading with a Purpose (
Slide 41: Global Trade Transformation Reducing Volatility
Global Trade Transformation Reducing Volatility Global Trade OP 2014 2015 2016 2017 2018 2019 2020 2021 F
Slide 42: Veronica Braker
Veronica Braker Senior Vice President, Global Operations
Slide 43: Our Focus on Productivity
Our Focus on Productivity Operational Reduced Tools for Efficiencies Costs Success
Slide 44: Centers of Excellence
CENTERS OF EXCELLENCE Operations and Technology Procurement Supply Chain
Slide 45: COEs in Action
COEs in Action 19K Ton Reduction in Carbon Emissions from Brazil Wind Project
Slide 46: Performance Excellence Delivering Results Across ADM
Performance Excellence Delivering Results Across ADM $360M $360 M in Run-rate Savings since 2017 across ADM 4.1% Reduction in Manufacturing Costs per Metric Ton since 2014
Slide 47: AS&O Improving Yields and Optimizing Energy
200M AS&O Improving Yields KwH/yr Automating Our Processes Equals 18,500 and Leveraging Data & Households Analytics Optimizing Energy $10M Savings
Slide 48: $100M 2021 AS&O Run-rate Savings
$100M 2021 AS&O Run-rate Savings
Slide 49: AS&O Pipeline Technology & Infrastructure Improvements
AS&O Pipeline Technology & Capacity Energy Yield and Infrastructure Debottlenecking Intensity Utilization Improvements Reductions Optimization
Slide 50: A Better AS&O
A Better AS&O Portfolio Improvements Maximizing Better Business Model Volumes and Operational Excellence Margins with Optimized Asset Network
Slide 51: Food Security
Food Security
Slide 52: World Agricultural Exports
World Agricultural Exports 700 130MMT Increase 600 21% 500 Increase in World EXPORTS (MMT) Agricultural 400 Exports Over Next 10 Years 300 200 (Includes: 100 Corn, Soybeans, Soybean Meal, Wheat) 0 /0 7 /1 0 /1 3 /1 6 /1 9 /2 2 /2 5 /2 8 /3 1 06 09 12 15 18 21 24 27 30 20 20 20 20 20 20 20 20 20 Nort
Slide 53: Sustainability
Sustainability
Slide 54: U.S. Renewable Green Diesel Production
U.S. Renewable Green Diesel Production Gallons 5B $5.00 1B $1.00 2021 2025 P
Slide 55: Fundamental and Structural Change
Fundamental and Structural Change
Slide 56: ADM Soy and Canola/Rapeseed Crush Margins
ADM Soy and Canola/Rapeseed Crush Margins Soy ($/MT) Canola/Rapeseed ($/MT) $53 $53+ $43+ $43 $43 $38 2015-2020 2021-2025 P 2015-2020 2021-2025 P
Slide 57: Productivity and Innovation
Productivity and Innovation
Slide 58: Destination Marketing
Destination Marketing 30MMT 23MMT 10MMT 2014 2021 2025 P $130M in Added OP
Slide 59: Increasing Participation in Growth Markets
Increasing Participation in Growth Markets
Slide 60: Spiritwood, North Dakota Crush Plant
Spiritwood, 1.5MMT Crush North Dakota 600M lbs Soybean Oil
Slide 61: Today's AS&O
Today's AS&O Built a Better Enduring Structural Business Trends Margin Improvement
Slide 62: Ag Services & Oilseeds Operating Profit
Ag Services & Oilseeds Operating Profit $2.7-$3.1B $200M Innovation $2.2-$2.6B $500M ($300M) Market Forces Productivity Normalized 2021 Market Forces Productivity Innovation 2025 P 2021 Baseline
Slide 63: Upside Opportunities
Upside Opportunities Se A? NY
Slide 64: Differentiation
Differentiation
Slide 65: Customers and Consumers Expect More
Customers and Consumers Expect More
Slide 66: Uniquely Positioned to Manage Complex Value Chain
Uniquely Positioned to Manage Complex Value Chain
Slide 67: Expanding Digitization
Expanding Digitization
Slide 68: Chris Cuddy
Chris Cuddy Senior Vice President, President Carbohydrate Solutions
Slide 69: We Have Built a Better Carbohydrate Solutions Business
Consider other image pack Fuel Bread (all in one sheet) We Have Built a Better Carbohydrate Solutions Business
Slide 70: Productivity
Productivity Optimizing Limiting Increasing the Asset Earnings Efficiencies Network Volatility
Slide 71: Optimizing the Asset Network: Mendota, IL
Optimizing the Asset Network Mendota, IL
Slide 72: Fight for the Grind: Diversified Product Options
Fight for the Grind Diversified Product Options Native and Modified Starches Core and Specialty Sweeteners Ethanol Amino Acids Enzymes Acidulants Yeast
Slide 73: Limiting Earnings Volatility
Limiting Earnings Volatility
Slide 74: ADM Vehicle Fuel Ethanol Production Capacity
ADM Vehicle Fuel Ethanol Production Capacity (Gallons) 1600M 130M Peoria Sale 900M 600M Repurposed (SAF, etc.) 2020 2025 P
Slide 75: U.S. Ethanol EBITDA Margin
U.S. Ethanol EBITDA Margin (Per Gallon) $0.30 ~$0.25-$0.35 $0.14 $0.07 Bloomberg 2015-2020 Avg ADM 2015-2020 Avg 2021-2025 P
Slide 76: Increasing Efficiencies
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Slide 77: Increasing Efficiencies: Power for 46K Households
Increasing Efficiencies Enough to Power 46K Households for a Full Year
Slide 78: Increasing Efficiencies: 26K Swimming Pools
Increasing Efficiencies Enough to Fill 26K Swimming Pools
Slide 79: ROIC and Baseline Earnings
Current ROIC Baseline Earnings >15% $700M-$900M
Slide 80: Sustainability
Sustainability
Slide 81: Sweetening & Texturizing Solutions
2021 Sweetening & Milling & Renewable BioSolutions Texturizing Baking Solutions Fuel Solutions Solutions
Slide 82: BioSolutions
BioSolutions a,
Slide 83: BioSolutions $250M OP
BioSolutions i B bo | $250M OP
Slide 84: BioSolutions
Sustainable Packaging BioSolutions Construction
Slide 85: $100M New Revenue Wins in 2021
$100M New Revenue Wins in 2021 10% Annual Revenue Growth to 2025
Slide 86: Market Growth BioSolutions
Market Growth 7% 5% 9% Sustainable Pharma Plant Packaging Market Health 4% 4% 5% BioSolutions Construction Fermentation Home and Personal Care
Slide 87: Dr. Todd Werpy
Dr. Todd Werpy Senior Vice President, Chief Science Officer
Slide 88: ADM is a Best-in-class Innovation Partner
ADM is a Best-in-class Innovation Partner
Slide 89: Why ADM? Capacity and Scale
Why ADM? Capacity and Scale 20B Pounds of Dextrose Produced Annually
Slide 90: Why ADM? Capacity and Scale
Why ADM? Capacity and Scale Access to Low Carbon Intensity Feedstock Fermentation Assets 10M Gallons of Total Fermentation Capacity
Slide 91: Why ADM? Capacity and Scale
Why ADM? Capacity and Scale Access to Low Carbon Intensity Feedstock Fermentation Assets Technology and Technical Expertise Strong Partnerships
Slide 92: Biobased Acrylic Acid
G>LGChem ADM Biobased Acrylic Acid
Slide 93: Corn-Based Lactic Acid and PLA
Corn-Based Lactic Acid and PLA
Slide 94: ADM is Leading Decarbonization within Our Industry
ADM is Leading Decarbonization within Our Industry
Slide 95: Ian Pinner
Ian Pinner Senior Vice President, Strategy & Innovation
Slide 96: Net Carbon Neutral Status for U.S. Flour Milling
Net Carbon Neutral Status for U.S. Flour Milling Footprint in 2021
Slide 97: Carbon Capture and Sequestration
Equivalent of removing 750,000 cars from the road 3.5milliion <= metric tons of CO2 Wisrentians mile underground
Slide 98: Sustainable Aviation Fuel Production
Sustainable Aviation Fuel Production (Billions of Gallons/Year) 35.0 White House SAF Production Target 30.0 25.0 20.0 15.0 10.0 5.0 DOE Target to Net Zero 0.0 19 24 29 34 39 44 49 20 20 20 20 20 20 20 EIA Jet Fuel Consumption U.S.SAF Current US SAFProduction Production U.S.SAF Announced US SAFProduc
Slide 99: Significant Upside Potential
Significant Upside Potential $1.3B-$1.6B $500M $800M-$1.1B $700M-$900M BioSolutions, $200M SAF, Other Renewables Innovation ($500M) $400M Market Forces Productivity 2021 Normalized 2025 P Future 2021 Baseline
Slide 100: Vince Macciocchi
Vince Macciocchi Senior Vice President and President, Nutrition
Slide 101: We Are Building the Leading Global Nutrition Business
We Are Building the Leading Global Nutrition Business
Slide 102: ADM Nutrition
ADM Nutrition A Premier Platform with Industry-Leading Growth Peers by YOY LTM % Revenue Growth 11% 4% 4% 3% 2% 2% 2% 0% ADM Nutrition Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Nasdaq IR Insight®
Slide 103: Nutrition Operating Profit 2015 vs 2021
~ $300M ~ $700M OP in 2015 OP in 2021
Slide 104: Portfolio Breadth and Capabilities Driving Superior Performance
Portfolio Breadth and Capabilities Driving Superior Performance Specialty Health & Animal Flavors Ingredients Wellness Nutrition Natural flavors, natural Soy, pea, wheat proteins; Pro/prebiotics, including B2B and B2C pet food colors, essentials, edible beans, peas, nuts, fibers; fermentation and tr
Slide 105: Human Nutrition Revenue
Human Nutrition Revenue By Segment By Region Food 36% EMEA Beverages 39% 42% North America 48% Dietary Suplements LATAM 5% Other APAC 4% 17% 9% YTD Q3 2021
Slide 106: Animal Nutrition Revenue
Animal Nutrition Revenue By Segment By Region Premix EMEA 22% 19% LATAM 35% Complete Feed 42% Amino Acids 11% North Specialty America 5% 26% Other APAC 1% Pet 19% 19% YTD Q3 2021
Slide 107: Global Consumer Trends Fueling Growth
Global Consumer Trends Fueling Growth Nourishment for Plant-Based Microbiome as the Clean and Transparent the Whole Self Lifestyles Root of Wellness Sourcing Humanization Precise and Responsible Sustainable Advanced Renewables of Pets Animal Feeding Goodness and BioSolutions
Slide 108: Marie Wright
Marie Wright President of Global Creation, Design & Development
Slide 109: Systems Powering ADM's Edge
Systems Powering ADM’s Edge Diverse Applications Complete Pantry Systems and Formats Go-to-Market Taste Nutrition Function Texture
Slide 110: Industry-leading Human Nutrition Win Rates
Industry-leading Human Nutrition Win Rates Up 30% this Year
Slide 111: Leticia Gonçalves
Leticia Gonçalves President, Global Foods
Slide 112: Consider different burger picture to avoid “looks like the burger is burnt and floppy”
Consider different burger picture to avoid “looks like the burger is burnt and floppy”
Slide 113: Alternatives Growing to 10% of Meat and Dairy
ALTERNATIVES Growing to 10% of the Overall Meat and Dairy Revenue Global Retail Sales over $100B by 2030
Slide 114: Becoming the Leading Global Foods Solutions Company
Becoming the Leading Global Foods Solutions Company Innovation Globalization Customer Experience
Slide 115: Double Global Foods Revenue to $2.2B
Double Global Foods Revenue to $2.2B in Next 5 Years
Slide 116: Mark Lotsch
Mark Lotsch President, Global Health & Wellness
Slide 117: Global Probiotic Consumers
64% Global Probiotic Consumers Use or Purchase for Health and Well-being FMCG Gurus - Probiotics in 2021 - Global Report
Slide 118: The Microbiome and Human Biology
“The microbiome is an integral component of human biology, with a major role in health and well-being.” National Institutes of Health, Human Microbiome Project, 2019
Slide 119: Advancing Science to Improve Health & Well-being
Advancing Science to Improve Health & Well-being Digestive Immune Heart Healthy Healthy Mind Pharma Living Aging Solutions Digestion, Cell Function, Heart Health, Metabolic Muscle and Mental Focus, From Enteral Gut Health, Immune Cholesterol, Health, Weight Joint Health, Brain Health, to Parenteral
Slide 120: Biotics Overview
Biotics Overview Fuel Factories Output Prebiotics Probiotics Postbiotics
Slide 121: Grow Health & Wellness Revenue to $2B
Grow Health & Wellness Revenue to $2B in the Next 10 Years
Slide 122: Nutrition: A Premier Platform Enabling Industry-Leading Growth
Nutrition A Premier Platform Enabling Industry-Leading Growth Specialty Health & Animal Pet Flavors Ingredients Wellness Nutrition Solutions Annual Revenue Growth 10-12% 10-12% 15-18% 6-10% 10-12% Target Target EBITDA Margins 20-25% 20-25% 25-30% 5-10% 10-15%
Slide 123: Nutrition Operating Profit
Nutrition Operating Profit $1.25-$1.50B $700M $700M ($200M) $200M Innovation Market Forces Productivity Normalized 2021 Market Forces Productivity Innovation 2025 P 2021 Baseline
Slide 124: Nutrition 2025 Challenge $1.5B
Nutrition 2025 Challenge $1.5B
Slide 125: Ray G. Young
Ray G. Young Executive Vice President and Chief Financial Officer
Slide 126: We Have Built a Better ADM
We Have Built a Better ADM
Slide 127: 2014 Investor Day Highlights
2014 Investor Day Highlights Strategic M&A CapEx and and Return Dividend ROIC Grow Base Bolt-On M&A of Capital Ratio Goal Earnings to 30-40% 60-70% 30-40% 10% $4.00-$4.50 of Earnings
Slide 128: Disciplined Capital Allocation
Disciplined Capital Allocation 2015-2020 Operating Cash Flows Dividends (Before Working and Share Strategic Non-Core Capital Changes) Repurchases M&A Divestitures $14.3B $8.6B $3.2B $2.9B
Slide 129: Remained Disciplined and Focused
Remained Disciplined and Focused Disciplined During Downturn Returns-focused Built a Better Company Invested Prudently for Future Growth
Slide 130: 2014 Baseline to 2021 Baseline EPS
2014 Baseline to 2021 Baseline EPS $4.50 Repurchases: $3.00 Corporate: Lower Tax $0.65 Carb Nutrition: $(0.40) Rates: AS&O: Solutions: $0.55 $0.55 $0.70 $(0.55) Prior ASO Nutrition Lower Tax… Normalized Normalized … 2021 Prior… Baseline Carb Corporate repurchases Baseline
Slide 131: Dampened Earnings Volatility
Dampened Earnings Volatility 2014 to Current ~$1B ~$1B U.S. Ethanol Nutrition Toepfer and Global Trade Other Trading 2014 Current
Slide 132: Strong Future Earnings Growth
Strong Future Earnings Growth 2025 Baseline AS&O $2.7-$3.1B Carb Solutions $0.8B-$1.1B Includes Projected Nutrition $1.25-$1.5B Share Repurchases of ~$5 Billion Other $0.1B Maintaining Healthy Segment OP $4.9-$5.8B Balance Sheet, Total Corporate $(1.2B) Credit Rating Pre-Tax Income $3.7-$4.6B Effect
Slide 133: Financial Framework for Shareholder Value Creation
Financial Framework for Shareholder Value Creation Reinvestment in CapEx to Generate Value 30%-40% Strategic Growth Opportunities Share Operating Repurchases Value Creation Cash for ADM Flows Shareholders Available for Strategic Growth or Distributions to Dividends Distributions Shareholders 30%-40%
Slide 134: Metrics of Success
Metrics 2025 Metric of Success High Single-digit Growth Earnings $6-$7 EPS $1.25-$1.5B Nutrition OP CapEx 30-40% of Cash Flows Capital Dividend Payout Ratio 30-40% Allocation ~$5B of Share Repurchases 10% ROIC Returns EVA = $1B
Slide 135: Significant Upside Opportunities
Significant Upside Opportunities Significant $7.00 $6-$7 Upside $4.50 $3.00 Previous Baseline Normalized 2021 2025 P Baseline
Slide 136: The Path to Sustainable Long-Term Growth
The Path to Sustainable Long-Term Growth Capital OPTIMIZE Cost DRIVE Cash EXPAND 2025+ Future 2021-2025 Sustainable Growth 2015-2020 Improving Returns, 2011-2014 Creating Value Fit for the Journey
Slide 137: The Path to Sustainable Long-Term Growth 2025+
The Path to Sustainable Long-Term Growth CLIMATE PERSONALIZED MICROBIAL SOLUTIONS NUTRITION SOLUTIONS 2025+ Future
Archer-Daniels-Midland Company — Investor Day (December 2021) on 6ix